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Product Recall Risks Growing In Size & Number, Technology Drives New Triggers- Allianz
By peter oluka
Defective product risk is an increasing peril for companies, causing significant financial damage, according to a Allianz Global Corporate & Specialty (AGCS) report.
A faulty pedal causes a car to inadvertently accelerate. An outbreak of contaminated peanuts results in a 25% industry-wide reduction in sales. Each of these incidents triggered major product recalls, resulting in billion dollar losses.
Product-related risk is one of the biggest perils facing businesses today, with recall exposures having increased significantly over the past decade, bringing the potential for larger and more complex losses than ever before, warns insurer Allianz Global Corporate & Specialty (AGCS) in a new report.
It highlights the automotive industry as being the most impacted by product recalls, followed by the food and beverage sector, based on analysis of insurance claims.
“Product recalls have risen steadily in the past decade. We are seeing record levels of recall activity in size and cost today,” said Christof Bentele, head of Global Crisis Management at AGCS. “Tougher regulation and harsher penalties, the rise of large multi-national corporations and complex global supply chains, growing consumer awareness, impact of economic pressures in research and development (R&D) and production and even growth of social media are just some of the contributing factors behind this.”
Defective products not only pose a serious safety risk to the public but can also cause significant financial damage to the companies responsible.
Defective product/work-related incidents have caused insured losses in excess of US$2 billion over the past five years, making them the largest generator of liability losses, according to analysis, of insurance industry claims by AGCS.
Recall claims are a major contributor to this total, alongside product liability claims.
The report “Product Recall: Managing The Impact of the New Risk Landscape” analyzes 367 insurance industry product recall claims from 28 countries across 12 industry sectors between 2012 and the first half of 2017.
Overall defective product or work is the major cause of recall claims, followed by product contamination. The average cost of a significant, incident is in excess of US$12 million (€10.5 million), with the costs from the largest events far exceeding this total.
Over 50% of losses arise from 10 incidents. The IT/electronics sector is the third most affected industry after automotive and food and beverage, according to the claims analysis.
Automotive recalls most expensive and large-scale due to “ripple effect”
Automotive recalls account for over 70% of the value of all losses analyzed, which is unsurprising given recent record levels of activity in both the US and Europe.
“We see an increasing number of recalls with higher units in the automotive industry,” said Carsten Krieglstein, regional head of Liability, Central & Eastern Europe, AGCS. “This is driven by factors such as more complex engineering, reduced product testing times, outsourcing of R&D and increasing cost pressures. The technological shift in the automotive industry towards electric and autonomous mobility will create further recall risks.”
One of the largest recalls to hit the auto industry to date, involving defective airbags, is expected to result in some 60 to 70 million units across at least 19 manufacturers being recalled worldwide. Costs have been estimated at close to US$25 billion.
This incident exemplifies the growing “ripple effect” which impacts the automotive sector, but also other industries. Given the use of many common components, a single recall can impact a whole industry.
Food and beverage is the second most impacted sector, accounting for 16% of analyzed losses with the average cost of a significant product recall claim almost US$9.5 million (€8 million). Undeclared allergens (including mislabeling incidents) and pathogens are a major issue, as is contamination from glass, plastic and metal parts.
Malicious tampering and even extortion incidents pose an increasing threat, as well as the growth of “food fraud”, which has become a major issue, resulting in reputational damage and major losses, as seen in the horse meat scandal in Europe four years ago.
The report also notes that products from Asia continue to account for a disproportionate number of recalls in the US and Europe, reflecting the eastwards shift in global supply chains and historically weaker quality controls in some countries.
Yet increasing safety regulation and consumer awareness is ensuring recall activity is also rising across Asia.
Allianz Global Corporate & Specialty Product Recall Risk Cyber
Technology to prevent and drive future recall risks
The report also identifies emerging recall triggers that will drive future risks and claims, largely stemming from new technologies.
Advances in product testing such as genome-sequencing technology will make it easier for regulators and manufacturers to trace contaminated products in future, potentially saving lives, but also potentially spiking litigation activity, as liable parties can be more easily identified.
Cyber recalls may become an increasing reality. Hackers could change or contaminate a product by controlling machinery in automated production plants.
“Cyber is currently an underestimated risk,” said Bentele. “We have already seen recalls due to cyber security vulnerabilities in cars and cameras.” Innovative but untested technologies such as artificial intelligence and nanotechnology could also transform recall risk.
Social media is a fast and effective way of communicating with customers but can also exacerbate recall risk if not well-managed. “Social media is a real game-changer for product recall,” says Stewart Eaton, Head of Product Recall, UK, AGCS. “An erroneous post or tweet can cause reputational damage and directly impact the size of a recall, meaning companies need to react faster than before.”
Recalls for ethical and reputational, rather than safety, reasons are also on the rise, such as in cases where child or slave labor has been used in the supply chain or where food such as halal or vegan has been mislabeled or counterfeited. “There will be incidents when there is no legal requirement to recall but it is the right thing to do. This is a genuine business risk which companies have to be prepared for,” Bentele said.
Pre-event crisis management as part of corporate DNA
Pre-event planning and preparation can have a big impact on the size of a recall and the financial and reputational damage sustained.
As part of a holistic risk management program, specialized product recall insurance can help businesses recover faster by covering the costs of a recall, including business interruption. It also provides access to crisis management services, and consultants, which can test a company’s procedures and offer global support in areas such as regulatory liaison, communications, product traceability and tampering investigations and even genome sequencing and DNA testing to understand a product contamination.
“There is now much more attention on how companies deal with defective or contaminated products, how responsive they are and how resilient their safety systems are. More than ever consumers are also part of the agenda and are driving company behavior by making their choices subject to how companies deal with crises. A company that embraces crisis management, and makes it part of its DNA, is far less likely to suffer a major incidence,” said Bentele.
Telecommunications operators have resumed full SIM swap and related services following a four-week nationwide outage linked to the National Identity Management Commission (NIMC)’s migration to a new verification platform.
The outage rendered millions of subscribers unable to perform SIM-related tasks such as swaps, replacements, and activations.
Operators in the industry say the disruption began on June 26, 2025 when telcos temporarily halted SIM registrations and swaps due to unforeseen technical challenges during the transition to NIMC’s upgraded identity verification system.
The migration was mandated to enhance the integrity and efficiency of national identity management but caused major service interruptions across all Nigerian networks.
However, July 21, both MTN and Airtel confirmed via their social media handles that SIM swap services have now fully resumed.
MTN announced: “SIM swaps have now resumed. We can confirm that NIMC services are fully operational and appreciate their support in the migration to a new platform for NIN verification services for the telecommunications industry.
In a public update issued via its MTN Nigeria Support handle on X (formerly Twitter), MTN confirmed that SIM swaps have now resumed.
Telecom operators complained that the portal was unreliable or inaccessible, which resulted in the suspension of SIM swaps, number porting, and new SIM registrations, even though NIMC maintained that the platform was operating as intended.
Unexpected technical difficulties arose during the switch to the new platform, according to the Association of Licensed Telecommunications Operators of Nigeria.
Real-time NIN verification for SIM registration, replacement, and network migration was impacted by these issues.
“Unexpected technical difficulties have surfaced, impacting real-time NIN verification for SIM registration, replacement, and porting, following a recent directive from the National Identity Management Commission mandating Mobile Network Operators to transit to a new identity verification platform,” ALTON stated in a previous joint statement signed by Gbenga Adebayo, chairman, and Damian Udeh, publicity secretary.
The World Bank has affirmed that 84 per cent of adults in low-and middle-income economies, including Nigeria, own personal mobile phones.
The bank in its Global Findex 2025 report said mobile phone ownership was widespread and nearly everywhere. It said data from the Global Findex 2025 Digital Connectivity Tracker, revealed that “86 per cent of adults worldwide, and 84 per cent of adults in low- and middle-income economies, own personal mobile phones.”
The report pointed out that mobile phones and the internet had become widespread and essential to daily life in every economy around the world.
A earlier overview had indicated that Nigeria had a high mobile phone penetration rate, with estimates around 85 per cent to 87 per cent in 2024.
This translates to over 200 million mobile connections, making Nigeria a leading market in Africa for mobile phone ownership and usage. While the overall penetration is high, there’s a growing trend towards smartphone adoption, with forecasts predicting over 140 million smartphone users by 2025.
According to DataReporter, a total of 150 million cellular mobile connections were active in Nigeria in early 2025, with this figure equivalent to 64.0 per cent of the total population.
However, note that some of these connections may only include services such as voice and SMS, and some may not include access to the internet.
There were 107 million individuals using the internet in Nigeria at the start of 2025, when online penetration stood at 45.4 percent. Nigeria was home to 38.7 million social media user identities in January 2025, equating to 16.4 percent of the total population.
These headline stats offer a great overview of the “state of digital” in Nigeria at the start of 2025, but in order to make sense of how digital trends and behaviours have been evolving over time, we need to dig deeper into the data.
According to the World Bank, “as of 2024, individual ownership of mobile phones reached 86 per cent of adults worldwide.
“For many people, barely an hour goes by without their using a mobile device to make a call, ext a friend, read the news, access business information, post a meme on social media, pay for something, play a game, engage with a colleague or a customer, or search for information.
“As access to and use of digitally connected technologies increase, people, businesses, and governments place an increasingly high priority on online interactions. “Digitally connected technologies have clear, well-documented benefits.”
It further highlighted that access to mobile phones and the internet was associated with reduced poverty, increased consumption, and more employment for individuals in lowand middle-income economies.
“Women also experience these benefits, as internet access enables access to flexible jobs3 and has been shown to increase female labor force participation. “Mobile phones also facilitate information sharing.
For instance, in agricultural contexts, farmers’ access to real-time prices and buyer demand data can inform their decisions on where to sell, enhancing market efficiency and reducing the distances they would otherwise travel to get the best return for their product and time.
“Internet access also helps create jobs and aids individuals and countries in exporting goods and services,” it added. The World Bank further noted that owning a mobile phone furthermore enabled financial access through mobile money and other mobile financial services.
It added that these financial accounts and services, typically offered by mobile network operators or fintech firms and accessed via networks of local agents, were associated with lower rates of poverty, increased consumption and savings,and greater resilience to economic shocks.
Sophos, a global leader of innovative security solutions for defeating cyberattacks, today announced that it has been named a Leader in the 2025 Gartner Magic Quadrant for Endpoint Protection Platforms (EPP), marking the 16th consecutive time the company has received this recognition.
Sophos has been recognized in the Gartner Magic Quadrant for Endpoint Protection Platforms (EPP) since the inaugural publication for this category in 2007.
Sophos’ market-leading endpoint security solutions include Sophos Endpoint powered by Intercept X, Sophos Extended Detection and Response (EDR/XDR), and Sophos Managed Detection and Response (MDR).
Over 300,000 organizations trust Sophos endpoint security solutions to defend against cyberthreats, including advanced remote ransomware attacks and active adversaries.
Unique to Sophos, the solution includes adaptive defenses that automatically disrupt attackers by dynamically adjusting protection levels based on threat context.
“Sophos’ strength lies in its prevention-first strategy, designed to stop breaches before they start, adapt defenses in real time, and strengthen detection and response when it matters most,” said Kyle Falkenhagen, SVP, Product Management, Sophos. “We believe that receiving this recognition in the highly competitive endpoint security market for 16 consecutive reports reflects our relentless focus on developing innovative solutions that stay ahead of the global threat landscape and the adversaries we face every day.”
Sophos and Secureworks: The future of protection, detection, and response
Following Sophos’ acquisition of Secureworks in February 2025, combining two leading and complementary portfolios to offer a comprehensive suite of solutions for small, midmarket and enterprise organizations.
Secureworks Taegis XDR customers can use Sophos Endpoint to elevate their cyber defenses, at no additional charge, delivering both improved protection and return on investment.
The integration of Secureworks also adds a new Counter Threat Unit (CTU) to the Sophos X-Ops advanced threat response joint task force, further expanding the rich threat intelligence that informs all customers’ defenses.
Backed by Sophos’ advanced security technologies and a broad network of intelligence contacts and partners, the CTU plays a critical role in identifying and tracking threat actors and analyzing anomalous activity, uncovering new attack techniques, threats, and major shifts in the threat landscape.
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